China News Service, July 22. The State Council Information Office held a press conference on foreign exchange receipts and payments in the first half of the year on the 22nd. 

 

A reporter asked: In the context of the Federal Reserve raising interest rates sharply, how do you view the future trend of my country's foreign exchange receipts and payments? What impact will it have on my country's cross-border capital flows?

 

Wang Chunying, deputy director of the State Administration of Foreign Exchange and spokesperson, said that the Federal Reserve's unconventional monetary policy adjustment is a very important external variable for cross-border capital flows in other economies outside the United States, so it is highly valued. 

 

The last time the Fed signaled tightening was in 2013, almost 10 years ago. During this period, China's economic development has made historic achievements, achieving a higher level of development and a higher level of opening up. 

 

At present, we are more confident and better equipped to effectively resolve the impact of the Fed's monetary policy adjustment on China's cross-border capital flows. China's foreign exchange market is expected to continue its stable operation. We look at the development in the past ten years:

 

First, my country's comprehensive strength is stronger, and it can better exert its ability to absorb external shocks. In recent years, China's economic development has become more balanced, coordinated and sustainable. Last year's GDP was 2.1 times that of 2012, and its proportion in the global economy increased from 11% in 2012 to more than 18%. 

 

The country's economic strength, scientific and technological strength, and comprehensive national strength have all reached a new level. Recently, my country has effectively coordinated epidemic prevention and control and economic and social development, major macroeconomic indicators have stabilized and rebounded relatively quickly, and the economy has generally maintained a momentum of recovery and development. 

 

In June, the manufacturing purchasing managers index has returned to above the line of prosperity and decline, consumption and investment also continued to rebound, and the economic growth momentum has increased. With the implementation of various policies to stabilize growth, China's economy will gradually recover and maintain steady growth in the future.

 

Second, my country's balance of payments structure is more stable, which can better ensure the stability and security of cross-border capital flows. In recent years, the ratio of China's current account surplus to GDP has been around 2%, which is always in a balanced and reasonable range. 

 

The balance and stability of the international payments are outstanding among major economies in the world. At the same time, China's external asset-liability structure has been gradually optimized, and the scale of foreign exchange reserves has steadily ranked first in the world; the private sector holds nearly 6 trillion US dollars in external assets, and the resources to withstand external shocks are more diverse and more abundant; the growth of external debt and economic growth are matched. , and the stability has been improved. 

 

All the safety indicators of external debt are within the internationally recognized safety line, and the risks are generally controllable.

 

Third, China's promotion of a higher level of opening up can better expand the depth and breadth of the foreign exchange market. China's business environment has gradually improved, the negative list for foreign investment access has been implemented, and more foreign companies have come to invest in China. 

 

At the same time, the two-way opening of China's financial market has increased the types of subjects in the foreign exchange market and the types of sources of funds. The depth and breadth of the foreign exchange market has continued to expand, and it is more capable of absorbing or smoothing the fluctuations in cross-border capital flows, which is conducive to promoting Overall equilibrium of cross-border capital flows.

 

Fourth, the foreign exchange market adjustment mechanism is more mature, which can better play the role of the RMB exchange rate as an automatic stabilizer for adjusting the balance of payments. In recent years, my country has been adhering to the reform of the market-based formation mechanism of the RMB exchange rate. 

 

The RMB exchange rate has been floated in both directions, and its flexibility has been enhanced, which can release external pressures in a timely and effective manner. The transactions of market players remained rational and orderly, and expectations were generally stable. 

 

Enterprises are also becoming more risk-neutral in exchange rates and can better adapt to two-way fluctuations in exchange rates. Therefore, at present, there are more conditions to prevent and resolve the risk of cross-border capital flow through market-oriented means.

 

In addition, the impact of the Fed's monetary policy adjustment on the US dollar interest rate, exchange rate and the impact on the international financial market needs further attention. 

 

In fact, the Fed is also faced with a dilemma between controlling inflation and stabilizing the economy. The strength and rhythm of the Fed's monetary policy adjustment will need to be closely watched in the future. 

 

We will further coordinate development and security, pay close attention to external changes, assess the impact in a timely manner, and at the same time promote reform and opening up in the field of foreign exchange in an orderly manner to prepare for effective prevention and mitigation of external shocks.